... A new, and potentially dominant, ruling class is rising. Today’s tech moguls don’t employ many Americans, they don’t pay very much in taxes or tend to share much of their wealth, and they live in a separate world that few of us could ever hope to enter. But while spending millions bending the political process to pad their bottom lines, they’ve remained far more popular than past plutocrats, with 72 percent of Americans expressing positive feelings for the industry, compared to 30 percent for banking and 20 percent for oil and gas.

Outsource Manufacturing, Import Engineers

Perversely, the small number of jobs—mostly clustered in Silicon Valley—created by tech companies has helped its moguls avoid public scrutiny. ...

This is an equation that defines inequality: more and more wealth concentrated in fewer hands and benefiting fewer workers.

Not so much anti-union as post-union, the tech elite has avoided issues with labor by having so few laborers who could be organized. ...

But Americans with those skills shouldn’t rest easy, either. These same companies are always looking to cut down their domestic labor costs. Mark Zuckerberg, in particular, is pouring money into a new advocacy group, Fwd.us, with a board consisting of big-name Valley luminaries, to push “comprehensive immigration reform” (read: letting Facebook bring in a cheaper labor force). In a remarkably cynical move, Fwd.us has separate left- and right-leaning subgroups to prod politicians across the political spectrum to sign on to the bill that would pad the company’s bottom line.

Ostensibly, the increase in visas for high-skilled computer workers is a needed response to the critical shortage of such workers here—a notion that has been repeatedly dismissed, including in a recent report from the Obama-aligned Economic Policy Institute, which found that the country is producing 50 percent more IT professionals each year than are being employed in the field. The real appeal of the H1B visas for “guest workers”—who already take between a third and half of all new IT jobs in the States—is that they are usually paid less than their pricy American counterparts, and are less likely to jump ship since they need to remain employed to stay in the country. Facebook’s lobbyists, reports the Washington Post, have pressed lawmakers to remove a requirement from the bill that companies make a “good faith” effort to hire Americans first.

The Valley of the Oligarchs

Even as market caps rise, the number of Americans collecting any cut of that new wealth has scarcely moved. Since 2008, while IPOs have generated hundreds of billions of dollars of paper worth, Silicon Valley added just 30,000 new tech–related jobs—leaving the region with 40,000 fewer jobs than in 2001, when decades of rapid job growth came to an end. ...

But little of the Valley’s wealth reaches surrounding communities. ...

But past the conspicuous consumption, the most outstanding characteristic of the new oligarchs may be how quickly they have made their fortunes—and how much of the vast wealth they’ve held on to, rather than paid out to shareholders or in taxes. ...

Tech oligarchs control portions of their companies that would turn oilmen or auto executives green with envy. ... In contrast, Mark Zuckerberg’s 29.3 percent stake in Facebook is worth $9.8 billion. ...

The concentration of such vast wealth in so few hands mirrors the market dominance of some of the companies generating it. ... Even the oil-and-gas business, associated with oligopoly from the days of John Rockefeller, is more competitive; the world’s top 10 oil companies collectively account for just 40 percent of the world’s production.

Greater Representation with Minimal Taxation

Despite this vast wealth, and their newfound interest in lobbying Washington, the tech firms are notorious for paying as little as possible to the taxman.

Facebook paid no taxes last year, while making a profit of over $1 billion. ...

And now, these 1 percenters—who invested heavily in Obama—are looking to help shape the “public good” in Washington and, as with Fwd.us, what they’re selling as good for us all is what aligns with their interests.

... The oligarchs believe their control of the information network itself gives them a potential influence greater than more conventional lobbies. The prospectus for Fwd.us—headed up by one of Zuckerberg’s old Harvard roommates—suggests tech should become “one of the most powerful political forces,” noting “we control massive distribution channels, both as companies and individuals.”

One traditional way the wealthy attain influence is purchasing their own news and media companies. Facebook billionaire and former Obama tech guru Chris Hughes (who owes his fortune to having been another of Zuckerberg’s college roommates) has already started on this road by buying the New Republic. (His husband, perhaps not incidentally, is running for the New York State Assembly.) ...

If You're the Customer, You're the Product

Perhaps an even bigger danger stems from the ability of “the sovereigns of cyberspace” to collect and market our most intimate details. ... Apple is being hauled in front of the courts for its own alleged violations while Consumer Reports recently detailed Facebook’s pervasive privacy breaches—culling information from users as detailed as health conditions, details an insurer could use against you, when one is going out of town (convenient for burglars), as well as information pertaining to everything from sexual orientation to religious affiliation to ethnic identity. ...

But while Facebook and Google have been repeatedly cited both in the United States and Europe for violating users’ privacy, the punishments have been puny compared to the money they’ve made by snatching first and accepting a slap on the wrist later. ...

41 comments:

Anonymous
said...

Joel Kotkin he has always favored a lot of immigration and he was happy that during the 1990's La had a lot of garment work at low wages. He is happy that Houston is now getting a lot of illegal and legal immigration, so Joel is worst than Silicon Valley by far.

I've never had much respect for Kotkin's open borders position on immigration. Does this signal a change in his stance, or he is just using immigration as another way to criticize the (highly criticizable) tech elite?

You know, at the moment, with all the billionaires and politicians teaming up to push through their interests, I'm not all that inclined to dwell on ideological distinctions among us in the rag-tag rabble who aren't going along with their program.

Steve, would I be wrong in characterizing you as believing that the pinnacle society is the early-to-middle New Deal state?

With your newfound zeal for anti-plutocracy and defense of the common certainly anything pre-1933 is certainly far too hierarchal for you.

Yet you reject the late New Deal state and its multi-culturalism, so really things after 1970 started going downhill. I get the sense that for you America, probably California, circa 1960 represents the closest we're as likely to get to shangri-la. No?

As someone who works in the software industry outside the US I think you're dead wrong on this issue. The importation of workers may drive down wages in the short term but in the long run its what's keeping the US on top and hence with easily the best IT wages and jobs. You guys are draining a big chunk of the best and brightest from other countries and it cripples the local industry from forming any real big players in the global market as the talent base just isn't there.

I think their are a lot of big name internet operations that are huge, make a lot of money, are talked about a lot, and are fundamentally uninteresting conceptually.

Exactly the kind of thing you want to turn into a public utility.

Here is my pitch:

There are tons of Open and Free Software groups that somehow come up with steering committees to manage complex things, and plan for the future.

I think Facebook, eBay, Google, can easily be replaced with utilities, ones regulated and managed like they used to be before all this deregulation. Or run as a true co-op.

The government comes up with the seed money. We fund Craigslist with enough money, servers and bandwidth to crush eBay. (none of these little rules and whatnot that steer money to the company, Craig is pure man). One annoyance crushed.

Facebook is pretty easy too. There is an incredible amount of tech talent out there that could do this. If you think about Facebook, it is nothing more than a way for people who can't write HTML to make websites. The Networking tools are handy for them, and a way for the Zuck to accumulate marketing data. The guy... just doesn't come across as all that. Another annoyance crushed.

Google is harder. But I think it can be done. There is some weird relationship between them and the government already. Way back, close to a decade ago, I was thinking about applying to Google. If memory serves, you had to get a clearance. Maybe it had something to do with crypto, I dunno. But something is a little off with these guys.

So long and short. Turn these things into utilities. Get the Open/Free Software/Gnu folks to run things.

See stuff isn't so hard? Just step out of the Reagan box, and think like a 1960 Republican.

If you like, let's make it happen on a state by state basis. Texas could vote to keep Google, Facebook, and eBay. Massachusetts and California could go my way.

Yet you reject the late New Deal state and its multi-culturalism, so really things after 1970 started going downhill. I get the sense that for you America, probably California, circa 1960 represents the closest we're as likely to get to shangri-la. No? I think you nailed it, La went eariler and there was a lot of illegal Mexicans by 1980, and white flight started in the 1980's there but Orange, San Diego and Riverside it turn by the 1990's. Orange and San Diego had the lowerst poverty for large areas in 1970 at only 6.6 percent and still only 8 percent by 1980, the immirgation of illegal immirgants and legal immirgants changed this. Anaheim was a middle Class white City until 1987.

Take abortion, for example, the right is hurting itsself because blacks and hispanics have more abortions than whites but being against abortions means that blacks and hispanics have less abortions unless you are very religous why does the right always have to be against abortions, on American Ren this has been debated that maybe its ok to be pro-abortion for the right.

I've never had much respect for Kotkin's open borders position on immigration. Does this signal a change in his stance, or he is just using immigration as another way to criticize the (highly criticizable) tech elite? Kotkin usually spends hours bad mouthing California but praising Texas. California is worst on illegal immirgation than Texas but Texas Republicans are kinda like Rush Lambaugh they oppose it because their based doesn't like it but they support business that hired them there at high numbers in construcation or the resturants, they have never went for a e-verify program like Arizona or the South. Doing the Texas way with the exception of Lamar Smith that has proposed a e-verify system means that you still get the Republican base but still allow enough illegal immirgants in to do service or low skilled manufactoring or construcation or farmwork.

I think it is particularly stupid for Zuckerberg of all people to get into politics.

His company is totally reliant of the approval of his products, ie you and I. His products are extremely fickle and it wouldn't take much to drive them away and it wouldn't be very hard for a competitor to take his business. In some ways it's like he's in a state of perfect competition. He strikes me as the kind of personality who would mess this up. Immigration won't break him but something else is sure to come along.

Apple are cleverer. Putting Al Gore on their board was a particularly wise move.

Or because there isn't a "berg" (or a "borg") at the end of the culprit's name?

Que? Most of the people responsible don't look like they'd have qualified for the SS.

My guess is that there isn't any one person behind the IRS targeting 'far right' groups. The actual situation might be more analogous to 'who suggested the Watergate cover-up?' which was, 'no one ever suggested that there not be a cover-up?' Similar situations might be colleges discriminating against lower-income, rural whites in favor of (heavily Jewish) urban whites. No one on the admission committees thought about not discriminating.

I vaguely remember a piece a few years back about the 'shadow government' of the career civil service who would sabotage the policies of Republican Presidents. It's not some big-ass conspiracy: the bureaucracy is bunch of people who think pretty much the same way, promote people like them, drag their feet on the same things...Nixon had to force the IRS to target political opponents. The IRS targets Obama's enemies pro bono; quite possibly without Obama's consent or even desire. It certainly gives Democrats in power plausible deniability. The borg, as you call the them, has spent a few decades marching through the institutions. As Clinton or one of his people, I forget, said about the Air Force, 'They're our bombers now.' It might seem foolish to climb to the top and then try to break and subvert the institutions. They didn't do all that marching just to play fair, and enforce laws equitably.

If one thinks there's a grain of truth to KMac, it isn't the group selection, and it may not be conscious. One of the objections people have to evo psych generally is the ostensble evolutionary reasons they do stuff is not why they think they do stuff. It's a silly objection. Why do you breathe? Is it to expel carbon dioxide and absorb oxygen so you can continue aerobic metabolism? Maybe that's why you breathe. I breathe because I do it when I'm not thinking about it, and when I try to stop breathing it gets unpleasant. I don't have to have any conscious or unconscious understanding of why. Evolution just crafted the desire in ways that work. Why do people have sex? Is it to have babies, to recombine genes and beat Muller's ratchet? Maybe, but do you really need a reason?

If there's a grain of truth to KMac, there's no group evolutionary strategy beyond cooperate to compete, and it's probably not driven by conscious desire or follows a rational program. Whiskey, or TUJ, or a few others will defend American Jews by pointing out that Israel has a lot of well-off liberal Ashkenazi who try to subvert the country. If that's true, then it's more evidence for KMac being roughly accurate. The programming isn't to do what's good for Jewish people. The programming is infiltrate and subvert. Perhaps they early Zionists understood their potential tendencies and Kibbutzes were meant to counteract their join, climb, and subvert tendencies.

None of this is to say that Jews are particularly awful. I'm sure WASPs have tendencies that always work out for either other people or for WASPs. Anon, do you really think that Silaer, or everyone should ignore any and all misbehavior by 'bergs'? We can't even point out that Zuck wants things that are bad for us, even if we don't connect it to his ethnicity? Surely eventually someone who isn't J will notice that Zuck wants foreigners to come Facebook in the US, but wants facebook to go Israel for the foreigners. Why is that?

You know how non-criminal black dudes find it to their advantage to look as little like stereotypical black criminals? Whether it's wearing a suit or whistling opera? It's to their advantage, but lots don't do it. Maybe Jewish people in the US should take a page from that book and try to do the opposite of what vile anti-Semitic stereotypes would predict.

Sailer isn't pointing out Zuck's behavior because he wants to open gas chambers. He's pointing out Zuck's behavior so that Zuck will behave better. Exteme, even flamboyant, support of policies that the overwhelming majority of Americans want is in the long-term interest of Zuckerberg as a Jew: even the leftist 'We are the 99%' looked frightening to some Jewish people, which looked like an admission against interest.

them: 'The bloodsucking financial sector owns the government, sets the rules for themselves and is draining this country dry.'

admission against interest: that looks like anti-Semitism.

them: huh? We didn't say anything about Jewish people.

Admission against interest: well it sure sounds like us.

Old America has pretty good for Jewish people. New America, who knows? Owning Facebook of Cold Somalimexico won't be all that great, a populist government that turns FB into a public utility wouldn't be great for Zuck either. A happy, well-off populace is in his interest as a billionaire.

Brooks, Zuckerberg, and Rosin have basically won. If they are good winners it might last. If they insist on importing millions of aliens, and dancing on the graves of white Americans, especially so soon...The evangelicals will feel betrayed, almost like we've been stabbed in the back...How might that work out?

Right now its information technology. However, the next revolutions are supposed to be manufacturing-oriented with 3-D printing, fusion power, nanotechnology, and the like.

This will be the REAL technology revolution, and I think it will dwarf the information tech revolution, even though information technology will play a role in this up-coming revolution.

I view the current tech oligarchs as a temporary side-show.

What point Kotkin's article did NOT make is that these tech oligarchs invest heavily in R&D, rather than resting on their laurels in the manner of previous industry oligarchs. They invest a hard higher percentage of their company's revenues into R&D compared to any other industry. They are fully aware of the transitory nature of their wealth.

As someone who works in the software industry outside the US I think you're dead wrong on this issue. The importation of workers may drive down wages in the short term but in the long run its what's keeping the US on top and hence with easily the best IT wages and jobs. You guys are draining a big chunk of the best and brightest from other countries and it cripples the local industry from forming any real big players in the global market as the talent base just isn't there.

And how exactly does this benefit the average American? Kotkin's piece indicates that not many people are employed by these firms, and that these firms pretty much avoid paying taxes. So how do I benefit?

I don't know what nation you are from, but I am assuming you are able to use Apple and Microsoft products even though they are supposedly American-made. So if Apple and Microsoft decided to locate to your nation, would Americans still have access to their products? Of course they would. So what difference does it make whether they are in the USA or not? Does Japan or China suffer because Microsoft and Apple are based in the USA? I doubt it.

If having these firms based in America means we have to put up with their political shenanigans, then I would like to see them leave. BTW, we coddle these firms as if we needed them more than they needed us. The truth is these firms have to have access to the American market, the largest in the world. They need us a lot more than we need them.

" If you think about Facebook, it is nothing more than a way for people who can't write HTML to make websites."

Exactly. And it produces butt ugly results.

Apparently there was an open source type project to 'compete' with facebook, called Diaspora (Uh oh!), but it seems to have been abandoned.

One problem with such a project would be acquiring, setting up, running, and maintaining the servers necessary to store the info, I imagine. That's got to cost a pretty penny. Without a profit motive, it would be a tough go.

Joel supported the garment industry in La which employed maybe as many as 50,000 illegal immirgants in the heyday and he even praise it. Unlike the South white women stop sewing clothes back in Los Angeles in 1979. Just because he is pro-factoy doesn't mean Joel supports factory jobs done by the native population but many like the underground garment in LA, Orange, San Fran and New York which were done by illegal immirgants.

Q: Who is the typical California garment worker and what factors lead such individuals to take part in such an abusive industry?

A: The majority are immigrants. Some have work authorization, or residency, but most do not. The majority are women. About 75 percent are Latino, mostly from Mexico, but also from Central and South America. A large portion of Asian workers as well, including Chinese, Thai and Vietnamese workers.

Many newcomers go into the garment industry when they don't have the skills, language ability, work authorization, or knowledge of how to get into other industries. We have heard stories from workers that sometimes people "with papers" won't get hired because employers think undocumented workers will be easier to intimidate.

Many immigrants simply do not know their rights. And even if they do, they can not afford to stand up for them, because they are living day to day. If they were fired, the time that it would take to look for another job-and they would probably be looking for the same kind of low-paying, abusive garment job-is time that they can not afford to be without work. The fact that they are intimidated by employer threats of deportation, the fact that they don't know their rights, and lack of employment options all contribute to their tolerance of these conditions.Info on one of the factory industries that Joel supports.

This is slightly off topic Steve, but I've noticed that when you copy text from an article you often don't bother to copy the formatting or links. It would make the quoted text more readable if you made at least a minimal effort to do so. For example:

...expressing positive feelings for the industry, compared to 30 percent for banking and 20 percent for oil and gas.

Outsource Manufacturing, Import Engineers

Perversely, the small number of jobs—mostly clustered in Silicon Valley—created by tech companies has helped its moguls avoid public scrutiny...

"If Silicon Valley could get the personnel it needs in America, they would not need to search all over the world." - They don't need coolie labor, they want it. there is a difference. And let them move their businesses over seas if they want it that much. But they also want to enjoy the fruits of our society. We are not here to facilitate this arbitrage.

Kotkin's piece indicates that not many people are employed by these firms, and that these firms pretty much avoid paying taxes. So how do I benefit?

Do you have any retirement savings? Do you have a 401k or pension plan? Then chances are your financial future is heavily invested in the American tech industry. American tech companies have probably made up the bulk of your portfolio's gain over the past decade.

Investors over-allocated to domestic equities relative to foreign equities. One because basic portfolio theory tells you to overweight on assets denominated in your home currency. Local currency assets have lower return variance because of less FX exposure. Two because investment managers understand local companies more than foreign companies, so tend to be more heavily invested in what they know.

If you had a time machine and sent Apple packing its bags 20 years ago to some far off land, then as we stand today American investors would own a lot less wealth relative to their foreign counterparts.

Don't be oblivious. The business of American is Business. If American business fails then America fails along with it. If you want to see what an America with a failing business sector looks like take a gander at Detroit.

The tech industry is the most important and fastest growing industry in the modern post-industrial global economy. Consider what happens when we start mis-treating our most dynamic firms and go down this road of anti-market populism that the alt-right seems to be going nuts over lately.

We'll become what France has turned into. A once great dinosaur living off the fumes of the glories of its past successes. Heading to the trash heap of history.

Apple and Google are as important to America's long-term success as the Royal Navy was to Victorian England.

" You guys are draining a big chunk of the best and brightest from other countries and it cripples the local industry from forming any real big players in the global market as the talent base just isn't there."

Even if that's true, what about all the low IQ Mexicans, Guatemalans, Somalians and Chechens that follow the high IQ here like pilot fish follow sharks,

Rob -- I am not "defending" Jews because they need no defense; the problem is aristocracy. It happens even or especially in Israel, with one of the higher GINI coefficients in the OECD. Aristocracies throughout the West and even or especially in China HATE HATE HATE their people and victimize them constantly.

That's why Zuckerberg, and Gates, both radically different backgrounds, one Ashkenazi, the other WASPyier than WASP Central, want to crush historic America. There is no "subversion" here rather the desire to rule as an aristocrat. This is far older. A dream of aristocracy as old as the Babylonians.

If you had a time machine and sent Apple packing its bags 20 years ago to some far off land, then as we stand today American investors would own a lot less wealth relative to their foreign counterparts.

Why? Foreign investors have been able to purchase American securities in our exchanges for years. So despite Apple being an American company, foreigners are able to purchase its stock. Just like American investors can do the same with foreign firms in foreign exchanges.

Additionally, many foreign firms have offerings available in our exchanges. So an American can purchase the stock of a foreign firm through an American exhcange.

As for immigration, there is really no reason for these firms to have to import this type of labor. If they really believe that they cannot find Americans to do the job, then they should offshore. You don't need to be onsite to code. Additionally, if having people and facilities located in the US was so imperative, they would not so readily shift so much production to China and elsewhere.

As someone who works in the software industry outside the US I think you're dead wrong on this issue. The importation of workers may drive down wages in the short term but in the long run its what's keeping the US on top and hence with easily the best IT wages and jobs. You guys are draining a big chunk of the best and brightest from other countries and it cripples the local industry from forming any real big players in the global market as the talent base just isn't there.

It's the grunt work jobs that the Chindian H1B visa are taking, but that drives down the wages for the whole industry. The Mestizo lettuce pickers and drywall installers drive down the wages in those industries. Importing cheap foreign labor has devastated the middle class in the US. That is not up for debate any longer.

I haven't seen any "borg" stories here (maybe Swedenborgianism once). If ever a Spanish-named Jewish PGA star purchases Kaplan in a fit of steroid pique, I think I'll stay away from the blog for a few years

"Why? Foreign investors have been able to purchase American securities in our exchanges for years. So despite Apple being an American company, foreigners are able to purchase its stock. Just like American investors can do the same with foreign firms in foreign exchanges. " - perhaps he is slyly admitting that these companies can't do what they do without our society, our legal and patent protections among other things.

perhaps he is slyly admitting that these companies can't do what they do without our society, our legal and patent protections among other things.

Exactly. For all their bitching and moaning, these companies stay in the USA because they need this nation more than we need them. Our legal system, political stability, etc., along with the world's largest market makes us quite attractive.

The sad this is how they wish to trash the place that they so desperately need.

"Don't be oblivious. The business of American is Business. If American business fails then America fails along with it. If you want to see what an America with a failing business sector looks like take a gander at Detroit.

The tech industry is the most important and fastest growing industry in the modern post-industrial global economy. Consider what happens when we start mis-treating our most dynamic firms and go down this road of anti-market populism that the alt-right seems to be going nuts over lately.

We'll become what France has turned into."

The threat of turning into France probably excites more people than frightens them. I wouldn't mind living in France. And fyi, Detroit has a lot more problems than a failing business sector. Business is just one facet of a successful society/community. And dare I say not even the most important one.

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